Microsoft Pays $1.2B for Corporate Facebook Mimic

Yammer CEO David Sacks. Photo: Jim Merithew/Wired.com

Microsoft has agreed to purchase Yammer, a San Francisco startup that offers a Facebook-like social network designed specifically for businesses.

The acquisition had long been rumored, but on Monday, Microsoft confirmed that it had agreed to purchase the San Francisco startup for $1.2 billion in cash. Yammer is just one of many services that seek to duplicate Facebook’s success inside the world’s business, including Salesforce.com’s Chatter and IBM’s Connections.

“Yammer was built on a notion that things can grow virally,” Microsoft CEO Steve Ballmer said during a conference call with reporters. “The consumerization of IT is a trend that perhaps more than any other company out there, Yammer has gotten right.”

Founded in 2008, Yammer now claims more than 5 million corporate users, and its customers include such names as Deloitte, Ford, and 7-11. Like many new-age business apps, it began as a free web service, and as people started using to service to set up ad hoc social networks inside their companies, Yammer introduced a for-pay service that beefed things up for corporate IT departments.

Microsoft already offers various social networking tools intended for businesses, and others are under development in The Garage — its internal software incubator. The company’s collaboration tool, Microsoft SharePoint, has evolved into a kind of social networking tool used by such companies as Electronic Arts, for instance, and the company has demoed a Twitter-esque “microblogging tool” called OfficeTalk.

The company says Yammer will continue to run uninterrupted as a standalone service, but will eventually be wrapped into SharePoint as well as other Microsoft tools, including its Office 365 online business applications, its Dynamics customer relationship management tool, and its Skype voice-over-IP service. A beta of Office 2013 is expected in July, but it’s unlikely Yammer will be integrated in time.

Yammer will join Microsoft’s Office Division, led by division president Kurt DelBene, and its existing team will continue to report to current Yammer CEO David Sacks. “We couldn’t be more pleased to become part of the Microsoft Office division,” Sacks said. “There’s no better way to scale [our] ambition than to join the Microsoft team.”

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